How some rural hospitals score huge paydays from insurance companies

Many rural hospitals across the nation are facing financial challenges, causing some facilities to seek bankruptcy protection or close their doors for good. However, other rural hospitals are more profitable than ever due to enterprising executives who are allegedly using the facilities to reap big paydays from insurance companies, according to a CBS News investigation.

The owners of Chestatee Regional Hospital, a 49-bed hospital in Dahlonega, Ga., had been trying to sell the facility for years when Aaron Durall, a man from Florida, offered to buy the hospital for $15 million in 2016. After the sale, Mr. Durall, who also owned a laboratory testing company in Sunrise, Fla., moved part of the hospital's billing operation to Florida. Soon thereafter, the hospital began receiving big checks from health insurance companies — some up to $500,000.

The money was for toxicology tests on urine samples collected from across the country. Some of the testing was done at Mr. Durall's lab in Florida, but everything was billed through Chestatee Regional Hospital, according to CBS.

Insurance companies reimburse some rural hospitals at higher rates to help keep healthcare in rural communities. Mr. Durall reportedly capitalized on this by buying Chestatee and a few other rural hospitals. His lab made about $67 million billing tests through a hospital in Graceville, Fla., and approximately $31 million in the last eight months billing through a hospital in Northern California, according to CBS.

In an email to CBS, Mr. Durall said, "All testing at the rural hospitals you mention is properly billed."

Other businesses have entered into similar arrangements as Mr. Durall's lab company. In August 2017, the Missouri State Auditor released a report that revealed a rural hospital in the state generated $92 million in revenue in the six months after entering a new laboratory billing agreement with Hospital Partners, a Florida-based management company. This represented an increase of approximately 2,353 percent when compared to the previous six-month period.

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